Govt hopes to cut subsidy bill by Rs 23,400 cr; sets up high-level panel for FCI revamp

With a view to remove functional and cost inefficiencies in the Food Corporation of India (FCI), the union government on Wednesday set up a high-level committee to suggest various models to restructure the state-run entity which plays a key role in strengthening the public distribution system (PDS).

“It is commonly perceived that the FCI is plagued today with several functional and cost inefficiencies, which need to be removed for the efficient management of foodgrains and saving costs. Therefore, it has been decided to set up a high-level committee,” said an order issued by the food ministry.

The eight-member panel, headed by member of Parliament from Himachal Pradesh Shanta Kumar, will recommend on the restructuring of the FCI after considering various aspects of present structure and functional areas of the organisation. The panel will finalise its report and submit it to the government within three months, the order added.

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The FCI, set up under the Food Corporation Act, 1964, is a nodal agency for procurement, storage and distribution of foodgrains to the PDS and other welfare schemes.

The terms of reference of the panel are to study various models of restructuring or unbundling of the FCI and suggest the best-suited model to improve its operational efficiency and financial management.

The panel will give suggestions to reorient the role and functions of the FCI in the minimum support price (MSP) operations, storage and distribution of foodgrains and food security systems of the country.

The panel will also recommend cost-effective scientific models of storage, rationalised foodgrains movement, technology upgradation in foodgrains management and a way forward for the integration of supply chain of foodgrains.

Other members of the committee include FCI chairman-cum-managing director C Viswanath, former chairman of the Commission for Agricultural Costs and Prices (CACP) Ashok Gulati and electronic and IT secretary Ram Sewak Sharma.

The chief secretaries of Punjab and Chhattisgarh, besides academicians G Raghuram and Gunmadi Nancharaiah from the Indian Institute of Management (IIM), Ahmedabad, and Hyderabad University, respectively, are also part of the committee.

Finance minister Arun Jaitley, in his 2014-15 budget speech, had given top priority to restructuring of the FCI. He had said: “The government is committed to reforms in the food sector. Restructuring the FCI, reducing transportation and distribution losses and efficacy of the PDS would be taken up on priority.”

The FCI restructuring was one of the promises made by the BJP in its manifesto for the 2014 Lok Sabha elections.

Prime Minister Narendra Modi had been advocating unbundling of the FCI to bring efficiency in the administration and control food inflation.

With an aim to function efficiently, the FCI cut its wheat stocks by a substantial amount over the past two years, which could reduce the subsidy bill by about Rs 23,400 crore, according to_ The Times of India._The report states that wheat stocks have been cut by approximately 1. 3 crore tonnes.

Additional steps to reduce subsidy, TOI reports, include possibly reducing the duty imposed on rice and urging states like Rajasthan, Madhya Pradesh and Chattisgarh to refrain from giving farmers bonuses above the minimum support price.

With inputs from PTI